Shakedown: Low-paid and the poor hit hardest as TDs escape cuts
08/12/2010THE low-paid and the poor have been hardest hit by a savage budget that spared no one except the TDs needed to vote it through. Finance Minister Brian Lenihan chopped social welfare payments and hiked taxes — but decided TDs on €92,672 a year did not warrant a further pay cut.
Instead, he targeted families, middle-income earners, the low-paid and the poor as he introduced a €6 billion combination of tax hikes and spending cuts.
At a press conference last night, Mr Lenihan rejected suggestions that he should feel ashamed, with both he and the Taoiseach insisting they were “proud” of their work.
The main welfare payments were cut by €8 per week, with the changes to take effect from January. Mr Lenihan left the standard old-age pensions untouched for fear of a backbench revolt, but cut the widow’s pension, the invalidity pension, the blind person’s pension and carer’s benefit.
He drastically reduced the value of tax bands and credits, amended the PRSI system, and replaced the income and health levies with a new “universal social charge” imposed on anyone earning more than €4,004 a year.
The effects of the changes will bring another 132,000 low-paid people into the tax net and impose hikes running into thousands of euro on middle-income earners.
The changes mean:
* A single PAYE worker earning just €15,000 will now lose €399 a year under the universal social charge.
* A single PAYE worker earning €25,000 will pay an additional €989 a year in taxes and charges.
* A family with two children and one income of €55,000 a year will pay an additional €1,519 in taxes and levies.
Families were hit at every turn because, as well as seeing their taxes hiked, child benefit payments were cut and school transport charges increased.
Child benefit will be reduced by €10 per month for the first and second child and €20 for the third child.
Health premiums are also set to soar as a result of the Government decision to charge more for private beds in public hospitals.
Petrol rose by 4c per litre from midnight while diesel rose 2c. In a bid to “stimulate” the property market, Mr Lenihan slashed stamp duty from 7% to 1% but it will now apply to first-time buyers.
He announced further cuts to ministerial pay in a bid to alleviate public anger, with the Taoiseach’s salary falling by €14,000 to €214,000 a year and ministers’ salaries falling by €10,000 to €181,000.
But they represented cuts of just 5% and 6% respectively, at a time when the Government is proposing to slash the minimum wage by 12% from €8.65 to €7.65 an hour.
Mr Lenihan also introduced a cap of €250,000 on public sector pay but it won’t apply to existing judges.
He also left TDs’ pay untouched, but said increases to PRSI would ensure effective cuts for high earners in the public service. He also said public service pensions above €12,000 a year would be cut by an average of 4%.
Mr Lenihan defended the EU/IMF rescue plan but admitted that part of the reason for the severe correction was the rising cost of interest repayments due to the bailout of the banks.
He insisted the budget was the “first step” in ensuring Ireland got back on its feet, adding: “It is a substantial down-payment on the journey back to economic health.”
But Fine Gael finance spokesman Michael Noonan said it was a “puppet budget from a puppet Government” that offered “no hope, no jobs and no future”.
Labour social protection spokeswoman Roisin Shortall said the “cruel” welfare cuts would “cause enormous hardship and drive yet more poor families to the St Vincent de Paul”.
Campaigners also criticised the budget, with Barnados chief executive Fergus Finlay saying it would condemn thousands to the breadline.
“I never thought I would see the day when an Irish government legislated to make families hungry, but it happened (yesterday).
“The cuts in social welfare and in child benefit will force thousands of families to make choices no family should ever have to make,” said Mr Finlay.
Protests took place outside the Dáil last night as Government motions to pass key budget measures were voted upon.
But the Government’s task in passing these measures became considerably easier after Independent TD Joe Behan confirmed he would support the budget, thus widening its majority to four.
Meanwhile, the Taoiseach insisted he would lead Fianna Fáil into the general election. It came as backbenchers continued to express unease about the party’s prospects should Mr Cowen stay in place.